As retailers die off, former competitors swoop in

Two large Lego toys are displayed last week at a Target store in Bridgewater, N.J. Target's CEO estimates bankruptcies and closing have left $100 billion in market share up for grabs. Associated Press/Julio Cortez

NEW YORK — Toys R Us and Bon-Ton may be gone, but they haven’t been forgotten.

Companies like Target and online mattress company Casper are creating playbooks to pick up market share that those and other defunct or dying retailers left behind.

Casper, for instance, is teaming up with department stores like Nordstrom to introduce pop-up mattress shops in areas where Mattress Firm, which filed for Chapter 11 bankruptcy in October, had locations. And Kohl’s has been mapping out where retailers like Bon-Ton and Sears shuttered stores so it can target those customers with specific ads.

Kohl’s is also adding more beauty products, which had been an area of expertise for Bon-Ton, the Pennsylvania-based department store chain that closed the last of its stores in August. Kohl’s believes one-third of its store base is benefiting from department store closings, up from one-quarter a year ago.

Target CEO Brian Cornell estimated that up to $100 billion in market share is now up for grabs – about double what he foresaw just a year ago. In response, the company is accelerating its store remodels in areas where bankrupt retailers once had stores. Target has devoted extra space at 500 of its stores for bigger toys like electric cars, playhouses and musical instruments as well as adding nearly 200 more products. About half of those locations are about 5 miles from former Toys R Us stores.

In 2018, there have been roughly 30 retailers that have filed for bankruptcy, including household names like Sears Holdings Corp., Mattress Firm and David’s Bridal. That compares with 41 last year – the highest since 2011, according to S&P Global Market Intelligence, a research firm. Both Toys R Us and Bon-Ton liquidated this past summer just months after trying to reorganize in bankruptcy court.

In 2008, 440 retailers filed for bankruptcy, the highest number since S&P started tracking the data.

The rampant closures don’t tell the entire story. In fact, according to research firm IHL Group, 2018 will see a net growth of more than 3,800 stores, with 12,664 stores opening this year and 8,828 shuttering.

Retailers should be cautious about targeting shoppers from defunct retailers, says Craig Johnson, president of Customer Growth Partners, a retail consultancy.

“The trick is capitalizing on the opportunity without going overboard,” he said.

Sears has long ceded territory in plenty of areas like toys and clothing. Its last bastion: appliances and home improvement, both areas that home improvement retailer Lowe’s is targeting.

Lowe’s CEO Marvin Ellison told AP he estimates about $2.5 billion to $3 billion in sales is up for grabs in appliances; for home improvement, the figure is from $600 million to a billion dollars.

Still, even as retailers scramble to fill the gaps, in many cases that won’t be enough. Take Toys R Us, which had a constant supply of hot products throughout the year, not just for the holidays.

“No one is going to be able to fill the Toys R Us void,” said Isaac Larian, CEO of MGA Entertainment.

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